Virgin Money sees 53% profits surge

CEO Jayne-Anne Gadhia said the company continued to deliver strongly against its objectives

Published:16:16Wednesday 02 March 2016

Lender Virgin Money has seen profits rocket as its growth in mortgages, savings and credit cards remained a step ahead of the market.

The Newcastle-based group - which is reporting its first annual results since floating in 2014 - said underlying pre-tax profits surged 53% to £160.3 million in 2015, up from £104.8m in 2014.

The better-than-expected results came as mortgage balances rose 16% to £25.5 billion throughout the year, compared to market growth of 1.8%, while credit card balances climbed 44% to £1.6bn in comparison to market growth of 4%.

The lender also put in a strong performance for retail deposit balances, which grew 12% to £25.1 bn, ahead of market growth of 7%.

Shares in the group lifted more than 8%.

Chief executive Jayne-Anne Gadhia said the company continued to “deliver strongly” against its objectives and was eyeing growth opportunities for personal current accounts and unsecured lending.

She added: “Growth in our mortgage book outpaced the market as we continued to support demand in the UK housing market.

“Our savings franchise continued to flourish and deposit balances are now higher than at any point in our history.”

But she warned that the referendum on Britain’s membership of the European Union would “weigh on the prospects of the UK economy” and could trigger a “lengthy period of elevated uncertainty”.

Virgin Money said total income hit £454.8m for the full year, up from £367.3m in 2014, while statutory pre-tax profits rose to £138m from £34m in 2014.

It shrugged off the 3% rise in stamp duty on buy-to-let properties - set to come into force in April - stating that it would not have a “material impact on the business”.

The lender - which has 75 branches across the country and employs 3,000 people - said its mortgage business consisted of 17% buy-to-let and 83% residential.

It also said it would be able to absorb the impact of the new 8% surcharge on UK bank profits above £25m.

Shore Capital analyst Garry Greenwood said the company had reported a “strong set of results” as “the balance sheet showed stronger than expected momentum”.

Virgin Money also declared its first full-year dividend of 4.5 pence per share since floating on the stock market.

It means Sir Richard Branson’s Virgin Group - which owns a 35% stake in the lender - will receive a payout of £7m.

Sir Richard also picked up £5.2m in royalty payments for the lender’s use of the Virgin name.